The core package: what every lender asks for first
The request letter differs by lender, but the substance is remarkably constant, because every credit team has to prove the same three things: the income is real, the borrower is solvent, and the guarantor is worth the guarantee. Expect to produce the following, current and consistent with each other.
- Rent roll, unit by unit: tenant, lease start and end, monthly rent, deposits held, vacancies and arrears.
- Operating statements per property: year-to-date and usually two prior years of rent, operating costs and net operating income.
- Corporate financial statements for the borrowing corporation, and often for related companies, typically accountant-prepared.
- T2 returns and notices of assessment, commonly two to three years, proving what was filed and that nothing is owing.
- Personal net worth statement and personal notices of assessment for each guarantor.
- Structure chart: every corporation, who owns it, which properties and mortgages sit where.
- Property documents: leases, property tax bills, insurance certificates, and condo or management agreements where relevant.
| Document | What underwriting does with it |
|---|---|
| Rent roll | Tests income against actual leases, flags vacancies, arrears and below-market units |
| Operating statements | Normalizes NOI: real recurring income after realistic costs |
| Corporate financials | Reads leverage, equity, and every intercompany balance in the group |
| T2s and assessments | Confirms filings match the statements and CRA is not an unpaid creditor |
| Net worth statement | Prices the guarantee behind the covenant |
| Structure chart | Decides who borrows, who guarantees, and what security actually reaches |
Consistency is the quiet test inside the list. The rent roll must tie to revenue on the statements, the statements to the T2, and the mortgage balances to the structure chart. A package that agrees with itself moves through credit; one that needs explaining invites a deeper dig into everything.
What the lender computes from it: income the file can prove
Underwriting reduces your package to two figures, and it helps to know the arithmetic in advance. The first is debt service coverage: normalized net operating income against the payments on the proposed debt. Normalized is the operative word, because the analyst will not take your NOI at face value; they deduct a vacancy allowance even if you are full, impute a management fee even if you self-manage, add a reserve for future repairs, and strip out one-time items in either direction. CCA never enters the calculation, since it is a tax deduction rather than a cash cost, which is one of the few times the tax return flatters a landlord.
The second figure is loan to value, set by the lender's own appraisal rather than your opinion of the market, which is why the appraisal, environmental report and building condition assessment are ordered by the lender and paid for by you. Between the two figures, coverage usually binds before value does: plenty of well-secured deals die because proven income, on the lender's conservative math, cannot carry the requested payments.
Once several properties and companies are involved, the analysis goes global. The credit team will assemble, or ask you for, a consolidated cash flow across the whole group, every property's income against every property's debt service, because your guarantee makes the weakest building their problem. Portfolios that maintain that view monthly hand the lender a finished answer; the method is in our guide to building a consolidated cash flow view for multiple properties. Portfolios that do not maintain it get reconstructed by an analyst with less context and more caution.
Multiple corporations multiply the file: structure, guarantees and intercompany
A lender to one corporation in a group is exposed to the group, and the file grows to match. The structure chart comes first, because the ownership structure determines everything downstream: which entity borrows, which entities guarantee, whether title and beneficial ownership sit in the same company, and what the security package actually reaches. If a nominee corporation holds title while another company holds the beneficial interest, say so up front; discovered late, that arrangement reads as concealment even when it is routine.
Intercompany transactions get particular scrutiny, because they can manufacture income. Management fees charged between your own companies, rent paid by one entity to another, cost recharges: each inflates one company's revenue with dollars that never entered the group. Underwriting eliminates them, and it goes better when your own statements have already done so, with a reconciled schedule of intercompany balances that matches on both sides. Mismatched intercompany positions between two companies the lender is asked to finance are among the fastest credibility killers in a credit file.
Guarantees knit the entities together whether you plan it or not. Most owner-managed real estate borrowing carries personal guarantees, and often cross-guarantees between corporations, so a default in one company can pull on every other. That web is a financing fact and an estate fact at once, since the guarantees and mortgages survive the owner, which is why the same structure chart anchors the succession work as well. How the whole reporting stack should operate across entities is covered in reporting across multiple real estate corporations.
The compliance layer: HST, property tax and CRA can stall a closing
Lenders check your government accounts because some creditors outrank them. Unremitted HST and payroll source deductions sit behind CRA's deemed trust, which can rank ahead of a lender's registered security, and municipal property tax arrears carry priority over the mortgage itself. So expect requests for proof that HST filings are current, property taxes are paid, and nothing material is owing to CRA; a statement of account or the notices of assessment usually settle it. Arrears do not always kill a deal, but they will be repaid out of the advance, on the lender's terms, before you see the balance.
HST literacy also shows up in how your numbers are read. Long-term residential rent is exempt, so HST paid on operating and renovation costs is a real cost that belongs in the expense lines the lender is normalizing. Commercial rents carry HST that flows through collections, credits and remittances without being income at all. Statements that mix these up misstate NOI in one direction or the other, and an analyst who has to untangle your HST treatment will wonder what else needs untangling.
Insurance closes the layer: certificates naming the lender, coverage matching the appraisal's replacement cost, and, for condos, the corporation's own insurance and status documents. None of it is difficult; all of it is the difference between funding on schedule and a closing that slips while paperwork catches up.
What changes the ask, and how we prepare the package
Five facts move the depth of the request. The property type, since residential, commercial and mixed files carry different document sets and different HST profiles. The loan size and lender type, because a chartered bank, a credit union and a private lender sit at very different points on the documentation spectrum. Whether the deal is a purchase, a refinancing or a construction facility, each with its own evidentiary burden. The complexity of the ownership structure, which multiplies statements, guarantees and eliminations. And your compliance record, because clean filings shrink every list and arrears lengthen them.
Financial statement quality is its own lever. For owner-managed real estate companies most lenders accept a compilation engagement, accountant-prepared statements without assurance, and larger facilities sometimes specify a higher level of assurance in the commitment letter; read that clause before you sign rather than at first covenant date. We prepare compilation engagements built to sit inside a credit file: intercompany balances reconciled, rent rolls tied to revenue, and the notes a credit analyst actually reads.
Preparing lender packages is a core part of our practice, and it is where the firm's background shows: our founder spent years in banking and corporate finance before public practice, so the package we assemble is the one the credit team is trying to build anyway. For a specific deal we run it as a defined-scope Strategic Project, from structure chart to consolidated cash flow to the statement set, with a written fee agreed after a free fifteen-minute discovery call. For groups that borrow regularly, the financing support simply lives inside the ongoing engagement, so the file is always current when the term sheet arrives.
